Saeima approves state involvement in airBaltic's financial stabilization

On August 20, the Saeima passed, under urgency procedure, a law enabling the state's potential participation in the financial stabilization of airBaltic. The law allows the state to take part in purchasing the airline's bridge-financing bonds worth up to €30 million, and to capitalize claims arising from the state loan and state-owned bonds worth up to €50 million.

Lawmakers rejected a proposal by the Union of Greens and Farmers (ZZS) to remove the stabilization-measures clause from the law entirely. However, another ZZS proposal was approved, stipulating that the Prime Minister is responsible for coordinating the airline's financial stabilization measures within the Cabinet and for ensuring cooperation among involved ministries.

The law passed with 54 votes in favor, backed by deputies from the United List, National Alliance, New Unity and Progressives factions. Twenty-one lawmakers voted against, including some from the coalition partner ZZS.

Why the law is needed

According to the bill's explanatory notes, the law is needed so the state — as airBaltic's shareholder, creditor and bondholder — can make timely decisions during the company's financial stabilization process, protecting state financial interests and acting on equal footing with other investors and creditors.

The law allows extending the repayment term of the state loan issued to the company, and, if necessary, lets the state participate in providing bridge financing to the airline. Specific decisions on stabilization measures will be made by the Cabinet of Ministers.

The law also establishes regular parliamentary oversight, requiring the Cabinet to report to the Saeima's Budget and Finance (Tax) Committee at least once a quarter on the progress of the stabilization measures.